The incident illustrates the inherent, and perhaps poorly understood, risks represented by the combination of electronic trading and social media. The fake tweet was retweeted nearly 2,000 times before it was taken down. Coming from a trusted source like the AP, the news slammed the stock market instantly. The Dow was down and already recovering before the news was even being covered on the mainstream news channels, or on the front page of major media websites.

On the one hand, it illustrates the efficiency of the markets, said Henry Hu, a law professor at the University of Texas and former top SEC official. While the Dow did plunge, the selling stopped and the market started turning around before most people even knew why it had dropped. On the other hand, though, “it illustrates the somewhat increased vulnerability of the market to false news.” That vulnerability is compounded when malefactors can hijack a widely followed platform like the AP’s Twitter feed.

Part of this, Hu suggested, is also a result of the SEC’s recent decision to allow companies to utilize social media to spread news. If it wasn’t obvious before, it should be after this incident that traders are programming their computers to follow specific Twitter feeds, and buy or sell depending upon what develops there.

That’s where the problem comes in. The words “explosion” and “White House,” apparently, triggered sell orders. Lots of them, and while any human could look at that fake tweet and see there was something fishy about it, computer programs can’t. “The computers look for words without the overlay of human judgement,” Hu said.

Computerized trading, the world of algorithmic trading and “quant” traders, has become a dominate force in the market. Most trading these days takes place via what are colloquially called the tradebots. Investors got a dramatic example of how these programs can wreck the market in 2010 during the infamous flash crash, when the Dow plunged nearly 1,000 points in minutes, and then quickly recovered.

Today’s move wasn’t as dramatic as that, but the added element of social media and hackers means investors now have one more headache to worry about, and it’s an incident that’s “disheartening from an investor-confidence standpoint,” said John Buckingham, chief investment officer at Al Frank Asset Management in Aliso Viejo, Calif. So what’s an investor to do?

“The answer I’d give,” said Buckingham, a value investor, “is you ignore it and you don’t react to it.”

“It’s just the nature of the beast. We live in a more interconnected world,” he said. “It doesn’t change in my mind the long-term investing landscape.”